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The No-Fault One Year Back Rule as it Stands Today
April / May 2008
 CURRENT NOTICE REQUIREMENTS

     The no-fault one year back rule has two essential requirements.  First, an injured claimant must file a written no-fault application within one year of the date of accident.  Secondly, under current rules, a no-fault claim must be paid within one year of the date the expense is incurred or the claim is barred.  In more enlightened legal times, there were many exceptions to the above rules.  For example, if a person was incompetent or a minor, the one year back rules were tolled until the minor's 19th birthday or the date an incompetent person was able to knowingly understand his legal rights.  Further, no-fault claims were always tolled from the date a claim was submitted to an insurer until the date of a formal denial from the insurance company. 

 PRACTICAL RULES NO LONGER APPLY

     These exceptions were quite practical since it did not make sense for a minor or mentally incapacitated person to have to follow such strict rules or forever lose the right to have a no-fault claim paid by an insurance company.  Likewise, it made perfect sense to toll a claim while an insurance company investigated to see whether or not they would be voluntarily paying the claim without the need for litigation.  The idea of having to sue an insurance company before they denied the claim is irrational.  Unfortunately, the days of reason have passed and no-fault claimants and providers must be aware of the real world consequences of sitting on a no-fault claim and failing to file a lawsuit within the one year anniversary.

 REAL WORLD CONSEQUENCES

     Given the current rules that apply, it is critical that no-fault claimants and medical providers provide as much documentation and justification concerning a no-fault claim as early as possible when making a claim for no-fault benefits.  Claimants and/or medical providers should follow-up in writing as frequently as possible to ensure that the claim is being processed and that the insurance company has all the documentation that they require to make their decision as to whether or not a claim will be paid.  Finally, if the insurance company is simply dragging their feet and will not commit to payment, it is critical that a lawsuit be filed within one year of when the expense was legally incurred or the right to collect that benefit will be forever barred.  The filing of a lawsuit tolls the one year back rule. 
CONFUSED CLAIMS ADJUSTERS

It has come to our attention that insurance companies are now often telling injured persons that they don't need to worry about the one year back rule and that it is only necessary that the claim be filed within one year of the date that the expense was incurred.  Although some insurance adjusters may actually believe this, it is legally unsupported by the current Law which does not allow tolling of no-fault claims in any circumstance.  There currently is pending before the Michigan Supreme Court, the question of whether or not an action based on fraud  would toll the one year back rule.  In Cooper v Auto Club Insurance Association, (Supreme Court No. 132792), the Plaintiff seeks attendant care payments where a mother was paid $2.08 an hour to provide 24-hour skilled attendant care to her brain injured daughter and was advised by the claims adjuster that if she did not do so, the brain injured child would need to be institutionalized.  The Michigan Supreme Court will decide whether or not an action based on fraud would be an exception to the one year back rule found in MCL 500.3145.  If the conservative majority of the Supreme Court keeps to it's past track record in deciding no-fault cases, the likely outcome will be a 4 to 3 decision holding that fraud is not an exception to the one year back rule.


 

IT'S OKAY TO LIE?

     Consequences of this decision will be that an insurance company can knowingly lie to an insured and face no legal consequences.  For example, an adjuster can tell an injured person that they are not entitled to no-fault benefits even if they are and so long as one year passes, the person will have forever lost the right to claim benefits.  The Cooper case will probably be decided in the 2008 calendar year.


     Given the cruel reality of how the Michigan Appellate Courts have interpreted the no-fault one year back rule, no-fault claimants and medical providers should keep good track of their claims and seek legal representation early when the one year anniversary of a claim is approaching and the insurance company has just offered excuses as to why they have not paid the claim.